Sales Tax lawsuit costs city $55,000 in fees

Posted 5/15/19

A recent decision by the Tennessee Supreme Court that held the city of Cleveland was not required to share liquor-by-the-drink proceeds with the Bradley County School System will require no further …

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Sales Tax lawsuit costs city $55,000 in fees


A recent decision by the Tennessee Supreme Court that held the city of Cleveland was not required to share liquor-by-the-drink proceeds with the Bradley County School System will require no further action by the city.

The decision was handed down May 8.

During the Cleveland City Council’s Monday work session, Mayor Kevin Brooks inquired about court costs and legal fees incurred by the city.

“I was asked about who pays legal fees,” Brooks said.

City Attorney John Kimball said the legal fees are paid by the city and county to their respective attorneys.

Bradley County was represented by Cleveland attorney James F. Logan Jr. The city was represented by Nashville attorney Douglas S. Johnston Jr.

In addition, Kimball said court costs associated with appellate decisions are paid by the losing party, which would be Bradley County.

City Manager Joe Fivas said the city spent approximately $55,000 in legal fees during the lawsuit.

The decision brought to a close a lawsuit between the city and county that had made its way through the court system over several years.

In December 2017, the Tennessee Court of Appeals in Knoxville affirmed a 2015 ruling made by Bradley County Chancellor Jerri S. Bryant. In that decision, Bryant ruled in favor of the city.

As a result, the state's high court, based on its ruling in a companion case, rule Cleveland is not required to share its LBD proceeds with Bradley County.

“We hold that the distribution statute did not require the city to share half of its LBD tax proceeds with the county and other school systems in the county pro rata,” the court ruled. “Rather, the local education provision directed the city to expend and distribute the education portion of its LBD tax proceeds in support of its own municipal system.”

In another development during the City Council’s regularly scheduled meeting, Council members voted 5-1 to deny a motion to approve a liquor store license for Cleveland Liquor World, to be located on Wildwood Avenue.

Vice Mayor Avery Johnson was absent Monday due to an illness. Councilman David May voted against the motion to deny the certificate.

The vote for the liquor license has been postponed several times due to the proposed store’s location existing in a floodplain. Under Federal Emergency Management Administration regulations, no structural improvements can be made to the building. As a result, the building did not have the square footage required by the city liquor ordinance to operate as a liquor store.

During the Council’s work session, Fivas told members the city had not received design plans that would be in compliance with the city’s liquor store ordinance.

In other developments, the City Council:

• Voted 6-0 to re-submit bids for the Candies Lane Construction Project, which received one bid in the amount of $1,379,000.

• Voted to appoint Councilman Ken Webb to the Senior Citizens Advisory Committee. 

City offices will be closed on Monday, May 27, in observance of Memorial Day. The next City Council session will be held Monday, June 10, at 3 p.m., following its 1 p.m. work session at the Municipal Building.


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